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Time is of the Essence

Guest post by: Marijo McCarthy

Article Overview: For those of us who spend great chunks of our days reviewing and commenting on contracts, there are stock words or phrases that mean a lot to us - but very little, if anything, to our clients. Some of those words or phrases are absolutely essential; others have lost their impact over time. One of the latter is the phrase: "time is of the essence," which Black's Law Dictionary defines as, "performance by one party at [a] time or within [a] period specified in [the] contract is essential to enable him to require performance by [the] other party."

Time is of the Essence

For those of us who spend great chunks of our days reviewing and commenting on contracts, there are stock words or phrases that mean a lot to us — but very little, if anything, to our clients.

Some of those words or phrases are absolutely essential; others have lost their impact over time. One of the latter is the phrase: "time is of the essence," which Black's Law Dictionary defines as,

"performance by one party at [a] time or within [a] period specified in [the] contract is essential to enable him to require performance by [the] other party."

In plain English, the inclusion of this phrase simply means that one party to a contract is automatically entitled to terminate the contract if the other party fails to perform upon the time and conditions specified in the contract.

So, it's important, right? Well… let's explore the possibilities.

Most lawyers abhor vagueness in contract language and "time is of the essence in this agreement" certainly qualifies. Inclusion of the phrase provides a judge with evidence of your intentions when you entered into the contract, but in and of itself, and without further specificity, this may not be sufficiently strong enough to support a verdict in your favor.

Given all that, I would encourage you not to rely too heavily on the simple existence of this stock phrase in your contracts. Instead, be sure your requirements for performance are accurate, specific and time-constrained.

In practice, and since no small business owner ever wants to spend the time, money and emotional angst trying to prove their case in court, here are three recommendations to strengthen your intent and give it some enforcement —

1. Clearly state your expectations… both time and quality… for performance of the service or delivery of the product. Do not fall victim to vagueness, either yours or that of your customer. This will not serve either party well in the end.
2. Confirm that all dates and deadlines are accurate. Do not allow for assumptions to masquerade as a delivery date or performance to be qualified as "best efforts." You want the salient business terms plain and clear to both parties.
3. Put on your judge's hat. Chances are, if it's vague to you, it would be to a judge as well. Step back from your contract and try to see it through a third party's eyes… someone who has not spent weeks or months discussing each and every term and provision of performance. Consider how a judge — months or years down the line — might interpret the language which purports to document your business agreement.

Last month we talked about the 4 R's of contract review, honing in on some of the time-honored phrases that fill the pages of standard contracts. This is a good example of why that contract review is so essential.

Think of a contract as you do a puzzle: Start with the business basics in the center and then work your way out to the framework, filling in as you go.

And remember, time is of the essence as you proceed!

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Article Tags: blacks law dictionary, contracts, time is of the essence



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